DTCC Connection

Mar 16, 2017 • DTCC Connection

Unlocking the Power of Robotics

By Joseph King

Unlocking the Power of Robotics
(Left to right): Robert Garrison, James Lee, Roger Park and Christopher Surdak, JD

Robotics, machine learning and automation have emerged as the next wave in the disruptive technology revolution. Driven by financial and regulatory pressure, firms are exploring the technology’s ability to help reduce costs and risks, improve efficiency across the Enterprise.

Developing an enterprise strategy to identify and leverage the benefits of robotics technology was the focal point of discussion during the “Unlocking the Power of Robotics” panel at the DTCC Fintech Symposium 2017 in New York on March 1.

Robert Garrison, DTCC Chief Information Officer moderated the panel. Joining Garrison was James Lee, DTCC Chief Technology Officer, Roger Park, Partner and Principal, Strategy and Innovation Leader of Financial Services at Ernst & Young, and Chris Surdak, author and technology expert and Director of Robotics Process Automation Institute.

The Evolution of Robotics

Garrison asked the panelists to provide a framework for how the industry should be thinking about robotics, automation and artificial intelligence (AI) and how the technologies can be used.

Park described robotics and automation as a “continuum of automation from simple computing tasks that run on a desktop/laptop computer to what we’re starting to call intelligent platforms driven by machine learning and AI.”

He identified optical character recognition (OCR), image recognition and natural language processing, as related technologies that are enabling automation.

Providing insight into recent advancements in robotics, Park noted three key drivers: increased amounts of data, digitization and a lower cost threshold for implementing automation.

While automation is not new to the financial services industry, the current technology is taking it to a whole new level.

Spending on artificial technology in capital markets is expected to reach $1.5 billion this year and $2.8 billion by 2021, according to a new report authored by research and consulting firm, Opimas.

In another survey, conducted by the Genpact Research Institute and analyst firm HfS Research on finance in the digital age, about a third of the finance leaders said that robotic process automation (RPA) tools and applications are having an impact on their operations today. RPA is the finance and accounting technology they expected to show the greatest growth in impact over the next two years from 34% to 58%.

Park cited statistics from a new report from IBM Marketing Cloud, “10 Key Marketing Trends For 2017”. The report states that 90% of the data in the world today has been created in the last two years alone, at 2.5 quintillion bytes of data a day. The report predicts that with new devices, sensors, and technologies emerging, the data growth rate will likely accelerate even more.

Surdak noted there is a wide range of technology usage, including replicating a person’s activities - logging in, executing actions on the screen - and the potential to use the technology to outperform humans.

The key to sustaining the forward momentum, Surdak added, is to re-evaluate how you measure the ROI of robotics. “If you measure it in traditional ways and use your same old ROI models using Excel sheets, then you’re going to fail again,” he said. “To go from improvement to innovation or transformation, you need new metrics and you need to use this technology in a new and disruptive way or it won't pass muster yet again.”

According to Park, it is important that firms get the value proposition for implementing automation right from the start when deciding on the strategy. “If you get that right, that’s probably the most important thing,” he said.

Industry Successes

Park noted the industry has seen some success in the area of “proof of values”. Not just testing the technology, but understanding how that technology can transform a business process. He also noted the importance of understanding how to integrate that technology and its capabilities into enterprise business functions, as well as scaling it across an organization.

Surdak explained that when a firm tries to scale up or scale out a new technology, it has to look at all the up- and down-stream impacts, taking them into account when you look at the overall value proposition.

To illustrate these points, Lee provided a recent server build at DTCC as an example of the way the firm is applying automation. He noted the firm was able to reduce build time from a typical 65 day process to just five days, which he called “a pretty significant improvement.”

During the process Lee and his team found that the bottleneck effectively moved both up and downstream. “This taught us that we need to look at future automation efforts much more holistically.”

Challenges

With the technology improving and more firms taking advantage of it, Garrison queried the panel on the challenges firms might face as they look to automate processes.

Surdak noted that enterprise sponsorship is absolutely critical to succeed. “If you’re going to disrupt your current organization, there will be someone who wins and there’s going to be someone who loses, and you better figure out who that loser is and you better figure out how to get them on board,” he said. “You must have compliance, human resources and regulatory in the room at the beginning.”

Lee agreed that core sponsorship is important. However, he added, “sponsorship has to be across the entire grassroots of the organization and only through culture change can we start to enable that and make people feel comfortable, not necessarily with the way things have always been done, but the way we can imagine how it can be done.”

Takeaways

The panel closed with each expert sharing their key takeaways from the panel discussion.

Surdak urged audience members to get uncomfortable. “If we’re in an era of significant change, the things that made me an executive for the past 20 or 30 years should not be working anymore,” he said. “This disruptive change is causing a discontinuity.”

In the end, Park said, the business case for automation is too compelling to ignore. “Automation is going to happen,” Park said. “The technology is ready. It’s not just going to be about cost take out, it’s not going to be about de-risking, it’s about transforming business models and enabling new business models.”

“This isn’t a question of if, it’s a question of just when and I think that when is actually here now,” Lee said.

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